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P&G: 3Q bottomline surges 20%

May 4, 2001

P&G Hygiene & Healthcare has declared a huge 23% decline in its turnover to Rs 1,011 m in its 3QFY01. The company has a June ending accounting year. P&G's net profit however, surged nearly 20% during the period.

(Rs m) 3QFY00 3QFY01 Change 9m FY00 9m FY01 Change
Net Sales 1,308 1,011 -22.7% 3,842 3,571 -7.0%
Other Income 15 39 159.7% 36 64 81.1%
Expenditure 1,047 715 -31.7% 3,028 2,615 -13.6%
Operating Profit (EBDIT) 261 296 13.7% 814 956 17.5%
Operating Profit Margin (%) 19.9% 29.3%   21.2% 26.8%  
Interest 7 0   35 1 -96.0%
Depreciation 57 70 22.6% 171 213 24.6%
Profit before Tax 212 266 25.2% 644 806 25.3%
Tax 39 57 48.8% 114 149 30.8%
Profit after Tax/(Loss) 174 208 19.9% 530 658 24.1%
Net profit margin (%) 13.3% 20.6%   13.8% 18.4%  
No. of Shares (eoy) (m) 21.6 21.6   21.6 21.6  
Earnings per share* 32.1 38.5   32.7 40.5  
Current P/e ratio         19.1  

The surge in bottomline despite a decline in topline came largely because of a 32% decline in the company's operating expenditure. This led to a surge in operating margins by 940 basis points.

To lend focus to its business, P&G consciously decided to be present only in two products viz. Anti-cold (Vicks) and feminine care (Whisper). Its strategy has revolved around premium positioning of both its product categories. In a sense, the company has been focussing on margins (value) rather than volumes. But competition from products such as Dcold and Smyle has impacted the sales of Vicks cough drops.

On a nine month consolidated basis the company's turnover has declined by 7%. Here also, P&G's bottomline has improved by 24%.

The stock is trading at a P/e multiple of 19.1 times its annualised nine month FY01 earnings.

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